US and China should jointly tackle climate change, Yellen says

US Treasury Secretary pushes for greater co-operation between the two countries on big issues

US Treasury Secretary Janet Yellen, centre, speaks during a lunch meeting with women economists in Beijing on Saturday. Reuters

China and the US should join forces to tackle climate change, Treasury Secretary Janet Yellen said on Saturday, pushing for greater co-operation on big issues during a trip aimed at improving their strained relationship.

“Climate change is at the top of the list of global challenges, and the United States and China must work together to address this existential threat,” Ms Yellen said at a meeting on sustainable finance in Beijing, according to a text of her prepared remarks.

Despite increasingly adversarial relations between China and the US, Ms Yellen has often said that the two nations, as the world’s two largest economies, have a duty to co-operate on major global challenges including environmental issues and debt distress in poorer nations.

“As the world’s two largest emitters of greenhouse gases and the largest investors in renewable energy, we have both a joint responsibility – and ability – to lead the way,” Ms Yellen said at the gathering attended by Chinese and international climate experts.

Her comments come at the beginning of her second day of meetings in Beijing, in a trip largely aimed at re-establishing communication channels between the two geopolitical rivals.

Ms Yellen also said the US and China should communicate “directly” on specific economic concerns to strengthen ties.

"Amid a complicated global economic outlook, there is a pressing need for the two largest economies to closely communicate and exchange views on our responses to various challenges," Ms Yellen told Vice Premier He Lifeng on Saturday.

"This communication can help both sides more fully understand the global economic outlook and make better decisions to strengthen our economies."

Despite recent tensions, "we set a record for bilateral trade in 2022 suggests there is ample room for our firms to engage in trade and investment," she said.

She also addressed debt distress in emerging markets and developing countries and said: "We have a duty to both our own countries and to other countries to co-operate."

Ms Yellen also met with Chinese Premier Li Qiang on Friday, which the Treasury official said was a high-level discussion about the broader US-China relationship. Her meeting with Mr He is more likely to touch on specific concerns by both sides, the official said.

In a report on Friday evening, the official Xinhua News Agency said Mr Li identified mutual benefit as the essence of US-China relations and that he called for more communication and strengthening consensus on bilateral economic issues.

The two sides should have candid, deep and pragmatic talks, Xinhua reported the premier as saying.

In Beijing, Ms Yellen is seeking to explain to her counterparts the US strategy she outlined in April that is geared towards defending and securing US national security without trying to hold China back economically.

The task is particularly tricky as the US and China remain locked in a tit-for-tat trade war that warmed up last year with US export controls on semiconductors and chipmaking equipment.

The Biden administration is preparing an executive order curbing US outbound investment in China, which could come as soon as July and cover certain investments in sensitive technologies including semiconductors, artificial intelligence and quantum computing.

Meanwhile, President Xi Jinping’s government imposed controls on two critical minerals used in advanced technologies days before Ms Yellen’s arrival.

Earlier on Friday, she told a meeting of US businesspeople operating in China she was “concerned” by those curbs.

Ms Yellen’s message to Chinese officials is that competition between the two countries is not a “winner-take-all” situation and both sides should manage their rivalry with a set of fair rules.

Treasury officials have downplayed expectations of any major breakthroughs during the trip, saying instead it is aimed at building longer-term communication channels with the Chinese government’s new economic team.

US-China engagement now is a shadow of what it once was. Ms Yellen at one point would meet China’s equivalent every six months through the Strategic Economic Dialogue, but such forums became defunct in the Donald Trump administration, which used import tariffs against China.

While the Treasury official said restoring this dialogue was not specifically discussed in Ms Yellen’s meeting so far, the talks with Mr He could touch on how the two sides can set up frameworks to communicate appropriately.